DEF 14A of Clorox Co /De/, Oct 4, 2024

DEF 14A of Clorox Co /De/

Filed Oct 4, 2024 · FY20240001552781-24-000563

Open on EDGAR

  1. Electronic Delivery of Proxy Materials

    | Our incentive plan results reflect Company performance. Our short-term incentive plan paid out at target, reflecting both results versus goals and application of negative discretion by the MDCC. Our long-term incentive plan paid out above target, reflecting two years of strong results after a weaker first year of the three-year performance period. |

  2. Electronic Delivery of Proxy Materials

    | 133% | | Performance share units (PSUs) from our long-term incentive awards vesting in 2024 paid out at 133%. The performance-based award covering fiscal years 2022 through 2024 was measured based on economic profit (EP) growth during the three-year performance period, including one year of EP below our plan’s performance threshold and two years of EP growth exceeding our plan’s maximum performance level. |

  3. Electronic Delivery of Proxy Materials

    | 100% | | The Company multiplier for our short-term incentive for fiscal year 2024 was 100%. This result was driven by overdelivery of net earnings and gross margin, offset by softer net customer sales. |

  4. Electronic Delivery of Proxy Materials

    | Component and Rationale | CEO Proportion(1) | NEO(2) Proportion(1) | Performance Measures | Performance Period | Characteristics | | Base Salary Fixed pay to attract and retain talent, based on role, level of responsibilities, and individual performance. | | | • N/A | N/A | Fixed cash | | Annual Incentives Variable pay to incent and recognize performance in areas of short-term strategic importance. | | | • Annual net sales (50%) • Net earnings (30%) • Gross margin (20%) • Individual performance goals | One Year | Performance- based cash | | Long-Term Incentives Equity-based pay to incent and recognize performance in areas of long-term strategic importance, promote retention and stability, and align executives with shareholders. | | | • Economic profit • Variation in underlying stock price due to overall business results | Three Years | PSUs and RSUs |

  5. Electronic Delivery of Proxy Materials

    | (1) Proportion represents the actual base salary, target annual incentive award, and grant date fair market value of annual long-term incentive awards granted in fiscal year 2024 (with PSUs measured at target). Percentages may not total 100% due to rounding. Refer to the Summary Compensation Table on pg 59 for further details on actual compensation. |

  6. Electronic Delivery of Proxy Materials

    | Clorox’s IGNITE strategy—our long-term strategic plan to drive growth and create positive value for our brands, people, communities, shareholders and other stakeholders—includes both financial goals, as well as integrated ESG goals supported by strong governance. Our integrated annual report has been developed in alignment with voluntary third-party frameworks—specifically, Sustainability Accounting Standards Board (SASB) standards and the Task Force on Climate-Related Financial Disclosures (TCFD). We also disclose how our ESG priorities support specific U.N. Sustainable Development Goals. We encourage you to visit our ESG Data Hub | at clorox.metrio.net and Clorox’s website at thecloroxcompany.com/responsibility/, and to review our 2024 integrated annual report-executive summary for more detailed disclosures on our ESG progress in accordance with these frameworks. References in this proxy statement to, and any materials accessible through, our website are not incorporated by reference herein. This past fiscal year, Clorox continued to be recognized for its ESG efforts—including by Barron’s in the top spot of its 100 Most Sustainable Companies in the U.S. list and the Environmental Protection Agency as an EPA Safer Choice Partner of the Year. Below are a few highlights from this past fiscal year. |

  7. Shareholder Recommendations and Nominations of Director Candidates

    As part of its oversight of non-employee director compensation, the MDCC reviews the form and amount of compensation of non-employee directors at least annually to validate that the Company’s non-employee directors are compensated appropriately relative to peer companies. During fiscal year 2024, the MDCC worked with FW Cook for data analysis, guidance and recommendations regarding compensation levels as compared to our compensation peer group as defined in the Compensation Discussion and Analysis section of this proxy statement, as well as trends and recent developments in the area of non-employee director compensation. Clorox generally aims to compensate non-employee directors at or near the median of the compensation peer group.

  8. Shareholder Recommendations and Nominations of Director Candidates

    | Name | Fees Earned or Paid in Cash ($)(2) | Stock Awards ($)(3) | Total ($) | | Amy L. Banse(4) | 104,500 | 163,000 | 267,500 | | Julia Denman | 104,500 | 163,000 | 267,500 | | Spencer C. Fleischer | 124,500 | 163,000 | 287,500 | | Esther Lee | 119,500 | 163,000 | 282,500 | | A. D. David Mackay | 104,500 | 163,000 | 267,500 | | Paul Parker(4) | 104,500 | 163,000 | 267,500 | | Stephanie Plaines | 104,500 | 163,000 | 267,500 | | Matthew J. Shattock(5) | 242,000 | 163,000 | 405,000 | | Kathryn Tesija(4) | 104,500 | 163,000 | 267,500 | | Russell J. Weiner | 104,500 | 163,000 | 267,500 | | Christopher J. Williams | 129,500 | 163,000 | 292,500 |

  9. Shareholder Recommendations and Nominations of Director Candidates

    | (2) The amounts reported in the “Fees Earned or Paid in Cash” column reflect the total annual cash retainer and other cash compensation earned by each director in fiscal year 2024 and include amounts deferred into cash or DSUs and/or amounts issued in common stock in lieu of cash, as elected by the director. The annual cash retainer is paid to each director in quarterly installments. |

  10. Shareholder Recommendations and Nominations of Director Candidates

    | Directors who serve as a Board member, independent chair, lead independent director, or committee chair for less than the full fiscal year receive pro-rated retainer amounts based on the number of days they served in such position during the fiscal year. In fiscal year 2024, Matthew Shattock received a pro-rated independent chair retainer from the beginning of fiscal year 2024 through December 31, 2023 and a pro-rated lead independent director retainer from January 1, 2024 through the end of fiscal year 2024. In addition to the retainer amounts, each non-employee director is entitled to receive a fee of $2,500 per day for any special assignment requested by the Board. No special assignment fees were paid in fiscal year 2024. Payment Elections. Under the Company’s Independent Directors’ Deferred Compensation Plan, a director may annually elect to receive all or a portion of their cash compensation in the form of cash, common stock, deferred cash, or DSUs. Payment in Stock. Directors who elect to receive cash compensation amounts in the form of common stock are issued shares of common stock based on the fair market value of the common stock as determined by the closing price of the common stock on the last trading day of the quarter for which the fees were earned. Elective Deferral Program: Deferred Cash. For directors who elect deferred cash, the amount deferred is credited to an unfunded cash account that is credited with interest at an annual interest rate equal to Wells Fargo Bank, N.A.’s prime lending rate in effect on January 1 of each year. Upon termination of service as a director, the amounts credited to the director’s deferred cash account are paid out in five annual cash installments or in one lump-sum cash payment, as elected by the director. Elective Deferral Program: Deferred Stock Units. For directors who elect DSUs, the amount deferred is credited to an unfunded account in the form of units equivalent to the fair market value of the common stock on the last trading day of the quarter for which the fees were earned. When dividends are declared, additional DSUs are allocated to the director’s DSU account in amounts equivalent to the dollar amount of common stock dividends paid by the Company divided by the fair market value of the common stock on the date the dividends are paid. Upon termination of service as a director, the amounts credited to the DSU account, which include any elective deferrals and the annual DSU grants described above, are paid out in shares of common stock in five annual installments or in one lump sum, as elected by the director. DSUs may only be settled in shares of common stock. Equity Compensation Each non-employee director receives a majority of their annual compensation in the form of DSUs. DSUs are shares of the Company’s common stock that the director receives only upon terminating their service with the Company. Each non-employee director receives an annual grant of DSUs, the value of which was increased from $157,000 to $165,000 effective October 1, 2023. The aggregate value of the DSU award amount earned by a non-employee director serving for the full fiscal year 2024 was $163,000. Awards are made as of the last business day in the calendar year and represent payment for services provided during such calendar year. | The Company believes that the use of DSUs provides a stronger alignment between directors and the Company’s shareholders compared to outright stock ownership since directors have no ability to sell the DSUs while they remain on the Board. The Company has maintained the DSU program for its directors for over 20 years. Directors who serve as non-employee Board members for less than the full calendar year receive pro-rated awards based on the number of full fiscal quarters they served as a non-employee Board member during the calendar year. DSUs accrue dividend equivalents, and the balance of a director’s DSU account is paid out in common stock only following the director’s termination of service, as described in greater detail under Elective Deferral Program: Deferred Stock Units above. Fiscal Year 2025 Compensation Changes As discussed above, the MDCC reviews the form and amount of compensation of non-employee directors at least once a year to validate that the Company’s non-employee directors are being compensated appropriately relative to peer companies. The MDCC again reviewed non-employee director compensation in September 2024. As part of its review, the MDCC considered the data provided by FW Cook as well as its guidance and recommendations regarding compensation levels relative to our compensation peer group as well as trends and recent developments in the area of non-employee director compensation. After taking all of this information into account, the MDCC recommended, and the Board agreed, not to increase director compensation or make any other changes to the director compensation program. Stock Ownership Philosophy and Guidelines for Directors The Board believes that the alignment of directors’ interests with those of shareholders is strengthened when Board members are also shareholders. The Board therefore requires that each non- employee director, within five years of first being elected, own common stock or DSUs that are settled only in common stock having a market value of at least five times their annual cash retainer. This program is designed to ensure that directors acquire a meaningful and significant ownership interest in the Company during their tenure on the Board. Furthermore, as directors must hold the DSUs until termination of their service on the Board, they have aligned interests and appropriate incentives to promote long-term value for shareholders during their service as a director. As of August 31, 2024, each non-employee director was in compliance with, or was on track to meet (based on current Clorox stock trading prices), the guidelines, and in fact, the majority of our directors held common stock or DSUs with value far in excess of this amount. |

  11. Shareholder Recommendations and Nominations of Director Candidates

    | • | Our incentive plan results reflect Company performance. Our short-term incentive plan paid out at target, reflecting both results versus goals and application of negative discretion by the MDCC. Our long-term incentive plan paid out above target, reflecting two years of strong results after a weaker first year of the three-year performance period. |

  12. Shareholder Recommendations and Nominations of Director Candidates

    | • | The Company multiplier for our short-term incentive for fiscal year 2024 was 100%. This result was driven by overdelivery on net earnings and gross margin, offset by softer net customer sales. |

  13. Shareholder Recommendations and Nominations of Director Candidates

    | • | Performance share units completing their performance period at the end of fiscal year 2024 paid out at 133%. The performance-based award covering fiscal years 2022 through 2024 was measured based on economic profit (EP) growth during the three-year performance period, including one year of EP below our plan’s performance threshold and two years of EP growth exceeding our plan’s maximum performance level. |

  14. Our Company

    | Objective | | How we achieve this | | | Pay for Performance | We reward performance that drives achievement of Clorox’s short- and long-term goals and, ultimately, shareholder value. | | | Align Management and Shareholder Interests | We provide long-term, equity-based incentives and encourage a culture of ownership with stock retention guidelines. We reward executive officers for sustained performance as measured by operating results and shareholder value creation. | | | Attract, Retain, and Motivate Talented Executives | We maintain pay targets and a program design that align to external market practices and allow Clorox to be a magnet for high-performing executives. | | | Address Risk-Management Considerations | We motivate our executives to create long-term shareholder value and discourage behavior that could lead to unnecessary or excessive risk-taking by providing a balance of fixed and at- risk pay, with short-term and long-term performance horizons, using a variety of metrics tied to key drivers of sustainable value creation. | | | Support Financial Efficiency | We ensure that cash- and equity-based incentive payouts are appropriately driven by performance, and design awards to minimize unnecessary accounting charges. |

  15. Our Company

    Say-on-Pay Vote and Shareholder Engagement At our 2023 Annual Meeting of Shareholders, we asked our shareholders to approve, on an advisory basis, the fiscal year 2023 compensation awarded to our NEOs, commonly referred to as a “say-on-pay” vote. Our shareholders overwhelmingly approved the compensation to our NEOs, with approximately 93% of votes cast in favor of our proposal, signaling our shareholders’ support of our compensation program. We continued our general approach to compensation for fiscal year 2024, specifically our pay- for-performance philosophy and our efforts to attract, retain, and motivate our NEOs. We value the opinions of our shareholders and will continue to consider the results from advisory votes on executive compensation, as well as feedback received from our shareholders throughout the year, when making compensation decisions for our NEOs. Use of Market Data The MDCC uses a peer group of consumer products companies (the compensation peer group) to help determine competitive compensation rates for our executive officers, including the NEOs. The compensation peer group was selected by the MDCC, with input from FW Cook. The compensation peer group is used to evaluate both the levels of executive compensation and compensation practices within the consumer products industry. At the time of our compensation peer group review in May 2024, Clorox was at the 26th percentile for revenue and 47th percentile for market capitalization compared with the compensation peer group in effect for compensation analyses occurring in fiscal year 2024. The MDCC intends to review the compensation peer group again next year, taking into consideration changes in our position versus the overall group based on revenue, market capitalization, and other factors.

  16. Our Company

    Management engaged Aon to obtain and aggregate compensation data for the compensation peer group in fiscal year 2024. This data was used to advise the MDCC on setting target compensation for our NEOs for fiscal year 2024. FW Cook reviewed this information and performed an independent compensation analysis of the compensation peer group data to advise the MDCC. Although each individual component of executive compensation is reviewed, our overall goal is to target total direct compensation competitive with the median of the compensation peer group. Other factors, such as an executive’s level of experience or scope of role, may result in target total direct compensation for individual NEOs being set above or below this median range. Executive Compensation Governance We are focused on creating an effective compensation program that successfully aligns our key strategic objectives with the interests of our shareholders. We believe our executive pay provides reasonable and appropriate incentives to our executive officers to achieve our financial and strategic goals without encouraging them to take excessive risks in their business decisions. To reinforce this, we have adopted policies that guide our compensation practices as summarized below.

  17. Our Company

    | We Do… | | | | Vary our incentive plans: We use different metrics and performance horizons for the goals within our annual and long-term incentive plans. | | | Focus on financial measures relevant to shareholder value: We use economic profit as a rigorous long- term incentive metric and net sales, net earnings, and gross margin for our annual incentive metrics. | | | Require meaningful ownership: We apply stringent stock ownership and retention guidelines for all our executives. | | | Operate clawback provisions: Our annual and long-term incentive plans include clawback provisions; our clawback policy is robust and exceeds the NYSE requirements by enabling compensation recovery in the event of misconduct not related to a financial restatement. | | | Use a double-trigger: Change-in-control provisions for all equity awards require both change in control and termination. | | | Engage with shareholders: We have ongoing discussions with key institutional investors, including on the topic of compensation. | | | Engage an independent consultant: The MDCC engages a consultant and assesses their independence annually. |

  18. Our Company

    | We Do Not… | | | | Provide employment contracts: All executives are employed at will. | | | Reprice stock options: Any stock option re-pricing would require shareholder approval in advance. | | | Pay unearned dividends: No dividends or dividend equivalents are paid on unvested equity awards. | | | Pay tax gross-ups: No tax gross-ups are provided by Clorox to executives under any circumstances. | | | Provide excessive benefits or perquisites: Benefits and perquisites are limited, reflecting market benchmarks. | | | Permit hedging or pledging: Our policy prohibits hedging and pledging of Clorox stock. | | | Encourage inappropriate risk-taking: The MDCC and its independent consultant annually review incentive design for unintended consequences. |

  19. Our Company

    Tally Sheets. To help ensure our executive compensation design is aligned with our overall compensation philosophy of pay for performance and total compensation levels are appropriate, the MDCC annually reviews compensation tally sheets for each of our NEOs. These tally sheets outline current target total compensation, the potential wealth creation of long-term incentive awards granted to our officers under various potential stock prices, and the potential value of payouts under various termination scenarios. These tally sheets help provide the MDCC with a comprehensive understanding of all elements of our compensation program and enable the MDCC to consider changes to our compensation program, arrangements, and plans considering leading practices and emerging trends. Stock Award Granting Practices. Clorox typically grants long-term incentive awards each September at a regularly scheduled MDCC meeting. The meeting date, or a later date as determined by the MDCC at the September meeting, is the effective grant date for the awards, and the exercise/grant price is equal to the closing price of our common stock on the grant date. The MDCC may also occasionally grant equity-based awards at other times to recognize, retain, or recruit executive officers.

  20. Our Company

    Executive Stock Ownership Guidelines. To align the interests of our executive officers and our shareholders, all executive officers are expected to build and maintain a significant level of direct stock ownership. Ownership levels may be achieved over time in a variety of ways, such as by retaining stock received upon the exercise of stock options or the vesting of stock awards or by purchasing stock in the open market. At a minimum, executive officers are expected to establish and maintain direct ownership of common stock having a value equal to a multiple of each executive officer’s annual base salary: six times base salary for the CEO, three times base salary for NEOs and non-NEO members of the Clorox Executive Committee, and two times base salary for other executives. The following table reflects the guidelines and our NEOs’ ownership status, as of September 10, 2024:

  21. Our Company

    Ownership levels are based on shares of common stock owned by the NEO or held pursuant to Clorox plans, including vested PSUs deferred for settlement. Unexercised stock options and units not yet vested due to time or performance restrictions are excluded from the ownership calculations. Retention Requirements. Executive officers are required to retain a certain percentage of shares obtained upon either the exercise of stock options or the release of restrictions on PSUs and restricted stock units (RSUs). All executive officers are expected to retain 75% of net shares acquired after tax withholding until the minimum ownership level is met. After attaining the minimum ownership level, our CEO must retain 50% of net shares acquired after tax withholding until retirement or termination, and other executive officers must retain 25% of net shares acquired after tax withholding for one year after receipt. Securities Trading Policy and Prohibition on Hedging and Pledging. To align the interests of our shareholders with all of our directors, officers, employees, and consultants, our Insider Trading Policy does not permit any director, officer, employee, or consultant of Clorox either (1) to trade in the stock or other securities of any company when aware of material nonpublic information about that company, including Clorox as well as any customers or suppliers of Clorox or firms with which Clorox may be negotiating a major transaction, or (2) to engage in tipping or short-term, speculative or derivative transactions involving Clorox stock. This policy includes prohibitions on options trading and hedging and cautions against pledging Clorox stock as collateral. Directors and officers are prohibited from holding in a margin account and pledging Clorox stock. The Insider Trading Policy’s prohibition on engaging in hedging transactions in Clorox securities covers the purchase of a financial transaction instrument, or otherwise engaging in a transaction that hedges or offsets, or is designed to hedge or offset, any decrease in the market value of Clorox’s equity securities that were granted as part of the individual’s compensation or that the individual holds directly or indirectly. The following transactions are expressly prohibited by this policy:

  22. Our Company

    In addition, certain of our existing compensation plans and agreements, including the Annual Incentive Plan (AIP) and our long-term incentive plan award agreements, contain a provision providing for clawback of the incentive compensation following a restatement of Clorox financial statements if the covered individual’s fraud or intentional misconduct was a significant contributing factor to the restatement. Tax Deductibility Limits on Executive Compensation. The Internal Revenue Code (IRC) limits the federal income tax deductibility of compensation paid to our covered employees to $1 million per year. In setting executive compensation, the MDCC does not take this limit on deductibility into account. Equity Grant Policy. It is the MDCC’s practice to approve ordinary course annual equity grants for the current fiscal year at its regularly scheduled meeting held in September of each year. At this meeting, the MDCC approves each NEO’s annual equity award, including any portion that may be granted as stock options. It is the MDCC’s view that maintaining a consistent grant practice, based on a date that is usually set five years in advance, is in the best interests of Clorox, as it solidifies the relationship between pay and performance, while reducing the risk that timing of awards may benefit our NEOs. In fiscal year 2024, the MDCC delayed approval of annual equity grants due to the disruption caused by the August 2023 cyberattack. Approval of annual equity grants was moved to the MDCC’s regularly scheduled meeting held in November 2024. The date of the November meeting was scheduled five years in advance, like all MDCC meetings. The delay provided management additional time to evaluate the likely business challenges of fiscal year 2024 and set appropriate performance targets for annual equity grants. We do not schedule our equity grants in anticipation of the release of material, non-public information (MNPI), nor do we time the release of MNPI based upon grant dates of equity. The MDCC also does not take MNPI into account when determining the timing and terms of annual equity award grants. In the event MNPI becomes known to the MDCC prior to granting an equity award, the MDCC will take the existence of such information into consideration and use its business judgment to determine whether to delay the grant of equity to avoid any impropriety. In fiscal year 2024, the MDCC decided to stop issuing stock options to executive officers to simplify the design of the long-term incentive (LTI) program, while providing strong shareholder alignment with the resulting equity mix of 60% performance share units and 40% restricted stock units. Therefore, during the last completed fiscal year, we did not award stock options to any of our NEOs.

  23. Our Company

    | Component and Rationale | CEO Proportion(1) | NEO(2) Proportion(1) | Performance Measures | Performance Period | Characteristics | | Base Salary Fixed pay to attract and retain talent, based on role, level of responsibilities, and individual performance. | | | • N/A | N/A | Fixed cash | | Annual Incentives Variable pay to incent and recognize performance in areas of short-term strategic importance. | | | • Annual net sales (50%) • Net earnings (30%) • Gross margin (20%) • Individual performance goals | One Year | Performance- based cash | | Long-Term Incentives Equity-based pay to incent and recognize performance in areas of long-term strategic importance, promote retention and stability, and align executives with shareholders. | | | • Economic profit • Variation in underlying stock price due to overall business results | Three Years | PSUs and RSUs |

  24. Our Company

    | (1) Proportion represents the actual base salary, target annual incentive award, and grant date fair market value of annual long-term incentive awards granted in fiscal year 2024 (with PSUs measured at target). Percentages may not total 100% due to rounding. Refer to the Summary Compensation Table on pg 59 for further details on actual compensation. |

  25. Our Company

    Generally, the increases for NEOs were intended to address gaps to the median, reflecting increased tenure in their respective roles. Annual Incentives Clorox provides annual incentive awards to our NEOs under the AIP. Payouts under the AIP are based on the level of achievement of Company performance goals set annually by the MDCC, subject to shareholder-approved maximums. These performance goals are tied to Board-approved corporate financial performance goals and individual objectives. The AIP rewards enterprise financial performance and the individual performance of each of our NEOs. The amounts paid under the AIP are based on the following factors:

  26. Our Company

    | (1) A target value for each NEO, which is base salary multiplied by an annual incentive target (Target Award). |

  27. Our Company

    Target Award. Each year, the MDCC sets an annual incentive target level for each NEO as a percentage of their base salary, based on an assessment of short-term incentive targets in the compensation peer group and other factors such as individual experience. The annual incentive target level is typically set near the median of short-term incentive targets for comparable positions in the compensation peer group. Company Multiplier. At the beginning of each fiscal year, the MDCC sets financial goals for the AIP based on targets approved by the Board. At the end of the year, the MDCC reviews Clorox’s results against the goals set at the beginning of the year and approves the final Company Multiplier. For fiscal year 2024, the MDCC established goals for net customer sales, net earnings attributable to Clorox, and gross margin to drive sustainable, profitable growth and short- and long-term total shareholder return. This combination of metrics effectively balances a focus on both top-line and bottom-line performance. Consistent with our standard practice for over a decade, fiscal year 2024 targets for our AIP metrics were initially expected to be set equal to our Board-approved fiscal year 2024 budget. Setting targets equal to budget aligns the AIP with the Board’s approval of an appropriate expected outcome for the year and Clorox’s financial outlook as communicated to investors at the beginning of each fiscal year. However, the August 2023 cyberattack, which occurred after the fiscal year 2024 budget was approved and before targets had been approved for the AIP, caused wide-scale disruption to our operations and significantly impacted our ability to deliver the initial Board-approved budget. Management assessed the likely impacts of the cyberattack and separated them into two categories: primary and extended. Management recommended and the MDCC approved setting our targets below the Board-approved budget to account for our forecast of primary impacts of the cyberattack only, requiring management to deliver on significant recovery efforts to offset the extended impacts.

  28. Our Company

    | Annual Incentive Financial Goals (in millions) | | | | | | | | FY 2024 Goal | Weight | Threshold (0%) | Target (100%) | Maximum (200%) | Actual(1) | Result(1) | | Net Customer Sales | 50% | 6,680 | 7,107 | 7,533 | 7,261 | 104% | | Net Earnings Attributable to Clorox | 30% | 223 | 272 | 321 | 547 | 200% | | Gross Margin | 20% | 35.8% | 39.8% | 43.8% | 43.4% | 185% | | Company Multiplier (after discretionary adjustment) | | | | | | 100%(2) |

  29. Our Company

    | Name | Individual Multiplier | Performance Summary | | Linda Rendle | 100% | Linda provided exceptional leadership through significant disruption in FY24, during which the Company experienced a cyberattack midway through the first quarter after having a solid start to the year. Throughout the balance of the year, she led a strong and speedy recovery while simultaneously advancing the Company’s longer-term priorities including digital transformation, implementation of our new operating model with cost savings at the high end of the $75-100M range, portfolio evolution through the sale of our Argentina business and continued progress against our ESG goals (including achievement of pay equity (on the basis of gender) globally and our continued superior safety track record), all in support of our IGNITE strategy for long-term value creation. In addition, Clorox delivered a second straight year of 360 basis point improvement in gross margin, nearly returning to pre-COVID levels. And the Company launched innovation across the portfolio while building the pipeline with additional products and platforms. We finished the year with double-digit adjusted EPS growth and in a position of operational strength, having fully restored supply and distribution and recovered most of the market share lost during the disruption. | | Kevin Jacobsen | 100% | Kevin again guided the company through volatility in the midst of moderating inflation, continued organizational transformation and elevated uncertainty. Financial results exceeded targets, with top-line flat even after the impact of the cyberattack that occurred in Q1 and over 350 bps of gross margin improvement (for the second year in a row), generating double-digit Adjusted EPS growth. We thoughtfully managed our cash position through debt choices and asset sales as we navigated the aftermath of the cyberattack. Kevin led establishment of Global Business Services and was essential to our divestitures of our Argentina and Better Health VMS businesses. Kevin continued to serve as the executive sponsor for our HOLA employee resource group (ERG). | | Eric Reynolds | 100% | Eric led through significant operational disruption, driving a faster-than-expected recovery from our August cyberattack. Our financial results for the year were strong in light of the disruption, with flat top line and another year of significant margin recovery. He has led numerous new capability builds, including net revenue management, trade simplification and optimization, margin transformation and integrated business planning. Eric led our digital transformation with successful implementation of our Canada enterprise resource planning system and other global capabilities as well as significant transformation of our supply chain organization. He has been an essential contributor to our portfolio evolution, including significant contributions toward our Better Health VMS divestiture. Eric is an executive sponsor for two ERGs, PRIDE and Interfaith. | | Kirsten Marriner | 100% | Kirsten continued to lead our people agenda as well as our organizational transformation initiative, which was completed in FY24 and met the ongoing annual savings goal of $75-100M. As the company has continued its digital and organizational transformation, our engagement percentile rank vs. industry and Fortune 500 comparators increased while voluntary turnover again significantly decreased. We launched a successful new employer value proposition and campaign resulting in return on investment that exceed benchmarks and advanced cultural change in support of transformation and our new business unit- centric operating model. The Company continued to deliver on our commitment to fair and equitable pay, resulting in continued achievement of pay equity (on the basis of gender) globally. Kirsten sponsors our CelebrAsia ERG. | | Angela Hilt | 105% | Angela successfully led the enterprise response to our cyberattack, overseeing governance, regulatory, legal and crisis management elements of the Company’s response and recovery. She led progress on ESG including advancing metrics, data and tracking and materiality analysis to provide the foundation for future work. She serves as the executive sponsor for our Parents ERG. Angela was instrumental in the divestitures of our Argentina and Better Health VMS businesses, both of which were key outcomes in support of our portfolio evolution strategy. She also led work resulting in signification litigation and insurance wins and mitigation. Angela provided strong support to the Board on governance and enterprise issues. |

  30. Our Company

    | NEO | Base Salary | Annual Incentive Target (% of Salary) | Company Multiplier | Individual Performance Multiplier | Final Annual Incentive Plan Payout | | Linda Rendle | 1,250,000 | 160% | 100% | 100% | 2,000,000 | | Kevin Jacobsen | 780,000 | 100% | 100% | 100% | 780,000 | | Eric Reynolds | 780,000 | 105% | 100% | 100% | 819,000 | | Kirsten Marriner | 675,000 | 85% | 100% | 100% | 573,750 | | Angela Hilt | 650,000 | 80% | 100% | 105% | 546,000 |

  31. Our Company

    Long-Term Incentives We provide long-term, equity-based incentive compensation to our NEOs, which aligns Clorox’s performance and executive officer compensation with the interests of our shareholders. These incentive awards also support the achievement of our long-term corporate financial goals. Equity awards are granted under Clorox’s 2005 Stock Incentive Plan. The MDCC annually reviews the costs of, and potential shareholder dilution attributable to, our long-term incentive program to ensure the overall program is financially efficient and appropriate in the context of our compensation peer group. The MDCC also seeks to calibrate the long-term incentive program design to drive performance and deliver awards that are competitive with the compensation peer group and will effectively retain and motivate executive talent. Actual long-term incentive award targets for individual NEOs may vary from the median based on a variety of factors, such as the NEO’s performance over time, individual experience, critical nature of their role, and expected future contributions.

  32. Our Company

    In fiscal year 2024, the MDCC decided to stop issuing stock options to executive officers to simplify the design of the LTI program. NEOs received 60% of the value of their total fiscal year 2024 annual long-term incentive award in PSUs and 40% in RSUs. This equity mix provides strong shareholder alignment, balances reinforcement of long-term company performance with retention value, and reflects benchmark weighting of equity types. Like annual incentive awards, actual long-term incentive award payouts vary from the target based on how Clorox performs against pre-established performance targets (for PSUs) and based on changes in the market price of our common stock (for all equity types). From time to time, we grant additional time-based RSUs for special purposes for both executive and non-executive officers, such as in connection with a promotion or as a replacement for compensation forfeited at a prior employer by an externally recruited executive. No NEOs received such additional RSUs in fiscal year 2024. Performance share units. PSUs align the interests of our NEOs with the interests of our shareholders because the number of shares earned and the shares’ potential value are tied to the achievement of performance targets, as well as changes in Clorox stock price. PSUs pay out after a three-year performance period only if Clorox meets pre-established financial performance goals. The performance metric for PSU awards is EP. For purposes of the PSU performance metric, EP is defined as earnings before interest and taxes, adjusted for non-cash restructuring charges, times one minus the tax rate, less capital charge. It differs from, and therefore may not reconcile with, the external calculation of EP used in our press releases and SEC filings. For the fiscal year 2022 awards, granted in September 2021, the performance metric was EP during the performance period of July 2021 through June 2024. EP performance was measured relative to an EP dollar-value target for the first year of the performance period, tied to the fiscal year 2022 Board- approved budget, and an EP growth rate target of 6% for the second and third years.

  33. Our Company

    | Performance share units | Annual EP Growth | | | Adjusted(1) Actual EP/ EP Growth | Payout | | | Threshold (0%) | Target (100%) | Maximum (200%) | | | | FY22 Economic Profit Absolute Value ($M) | 371 | 474 | 525 | 284 | 0% | | FY23 Economic Profit Growth Rate | -9.0% | 6.0% | 13.5% | 48% | 200% | | FY24 Economic Profit Growth Rate | -9.0% | 6.0% | 13.5% | 59% | 200% | | Three-Year Economic Profit Growth | | | | | 133% |

  34. Our Company

    Executive Retirement Plan. Only certain senior-level executives participate in the Executive Retirement Plan (ERP). Under the ERP, Clorox makes an annual contribution of 5% of an eligible participant’s base salary and annual incentive award into the plan. Further details about the provisions of the Pension Plan, NQDC, and ERP are provided in the Overview of Pension Benefits and the Overview of Nonqualified Deferred Compensation Plans sections below. Post-Termination Compensation Clorox has a severance plan (the Severance Plan) that provides our NEOs with post-termination payments if the NEOs’ employment is terminated by Clorox other than for cause. These payments are intended to provide a measure of financial security following the loss of employment, which is important to attract and retain executives. The severance benefits are designed to be competitive with the compensation peer group and external market practices. Clorox also has an Executive Change in Control Severance Plan (the CIC Plan), which provides severance benefits to certain eligible executives of Clorox, including all NEOs, if their employment with Clorox is involuntarily terminated in connection with a change in control of Clorox. In addition to helping mitigate the financial impact associated with termination after a change in control, these benefits further align the interests of our executive officers with the interests of our shareholders by providing incentives for retention, for business continuity purposes. Under the CIC Plan, NEOs are eligible for change in control severance benefits if their employment is terminated in connection with a change in control, either by Clorox without cause or by the NEO for good reason. See the Potential Payments Upon Termination or Change in Control section for additional information. Perquisites We provide our NEOs and other executives with limited benefits competitive with our compensation peer group and consistent with our overall executive compensation program: an annual executive physical exam, a health club membership allowance, a car allowance or company car, paid parking at our headquarters, and financial planning services. These perquisites are beneficial to Clorox by enabling our NEOs to proactively manage their health, work more efficiently, and optimize the value received from our compensation and benefits programs. We also provide security services to our CEO, which are based on an assessment of risk and which we believe are for Clorox’s benefit. SEC rules require that certain security costs be reported as perquisites, and the aggregate incremental cost of these services is included in the “All Other Compensation” column of the Summary Compensation Table. The Management Development and Compensation Committee Report As detailed in its charter, the MDCC oversees Clorox’s executive compensation program and policies. As part of this function, the MDCC discussed, and reviewed with management, the CD&A. Based on this review and discussion, we have recommended to the Board that the CD&A be included in the proxy statement. THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE as of June 30, 2024:

  35. Our Company

    | Name and Principal Position | Year | Salary ($)(1) | Stock Awards ($)(2)(3) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6) | Total ($) | | Linda Rendle Chair and Chief Executive Officer (CEO) | 2024 | 1,221,321 | 8,749,935 | — | 2,000,000 | 668 | 713,384 | 12,685,308 | | | 2023 | 1,168,269 | 5,599,719 | 1,399,981 | 3,121,313 | 1,293 | 359,076 | 11,649,650 | | | 2022 | 1,111,538 | 4,919,815 | 1,229,989 | 843,750 | 1,098 | 428,618 | 8,534,808 | | Kevin Jacobsen Executive Vice President and Chief Financial Officer (CFO) | 2024 | 788,504 | 2,399,924 | — | 780,000 | 8,430 | 342,787 | 4,319,645 | | | 2023 | 768,462 | 1,759,750 | 439,988 | 1,258,370 | 6,051 | 196,330 | 4,428,950 | | | 2022 | 729,231 | 1,599,869 | 399,996 | 333,000 | — | 231,809 | 3,293,904 | | Eric Reynolds Executive Vice President and Chief Operating & Strategy Officer | 2024 | 793,538 | 2,799,821 | — | 819,000 | 1,758 | 351,627 | 4,765,745 | | | 2023 | 768,462 | 1,999,819 | 499,974 | 1,390,830 | 2,869 | 192,340 | 4,854,294 | | | 2022 | 729,231 | 1,839,792 | 459,998 | 370,000 | 1,844 | 239,785 | 3,640,651 | | Kirsten Marriner Executive Vice President and Chief People & Corporate Affairs Officer | 2024 | 689,999 | 1,999,903 | — | 573,750 | — | 274,901 | 3,538,553 | | | 2023 | 675,000 | 1,199,920 | 299,984 | 988,975 | — | 191,513 | 3,355,392 | | | 2022 | 643,269 | 1,039,776 | 259,989 | 260,000 | — | 204,913 | 2,407,947 | | Angela Hilt Executive Vice President, Chief Legal Officer, and Corporate Secretary | 2024 | 640,005 | 1,999,903 | — | 546,000 | 6,811 | 260,232 | 3,452,950 |

  36. Nonqualified Deferred Compensation Plan

    Nonqualified Deferred Compensation Plan Under the NQDC, participants may voluntarily defer the receipt of up to 50% of their base salary and up to 100% of their annual incentive award. In addition, the NQDC offers a 401(k) restoration provision for those who defer at a required level. All Clorox 401(k) contributions are made in the form of (i) a fixed 6% employer annual contribution and (ii) an employer match of up to 4% of pay into the 401(k) Plan, subject to IRC limits. Contributions on eligible compensation that exceed the IRC limits are contributed into a participant’s NQDC account under the 401(k) restoration provision. Participants in the NQDC may elect to receive benefits from the NQDC either in a lump sum or up to 15 annual payments upon a qualifying payment event. Participants may choose from an array of investment crediting rates that generally mirror the investment fund options available in the 401(k) Plan. The NQDC uses the same benefit formulas, types of compensation to determine benefits, and vesting requirements as the 401(k) Plan. The responsibility to pay benefits under the NQDC is an unfunded and unsecured obligation of Clorox.

  37. Severance Plan

    Severance Plan Under the terms of the Severance Plan, our NEOs are eligible to receive benefits if their employment is terminated by Clorox without cause, other than in connection with a change in control. No benefits are payable under the terms of the Severance Plan if Clorox terminates the employment of the NEO for cause or if the NEO voluntarily resigns. Regardless of the nature of any NEO’s termination, NEOs retain amounts earned over the course of their employment prior to the termination event, such as balances under the NQDC, vested and accrued retirement benefits, and previously vested stock options, except as outlined below under Termination for Misconduct. For further information about amounts previously earned, see the Summary Compensation Table and Outstanding Equity Awards at Fiscal Year-End, Option Exercises and Stock Vested, Pension Benefits, and Nonqualified Deferred Compensation tables. Under the Severance Plan, each NEO agrees to return and not to use or disclose proprietary information of Clorox and, for two years following any such termination, the NEO is prohibited from soliciting for employment any employee of Clorox. Termination benefits under the Severance Plan for our NEOs are as follows: Involuntary Termination Without Cause. If Clorox terminates the employment of a NEO other than the CEO without cause, the Severance Plan entitles the NEO to receive a lump-sum severance payment after termination equal to two times the NEO’s then-current base salary. In the case of the CEO, the severance amount is equal to the sum of (i) two times the CEO’s base salary and (ii) two times the CEO’s target annual short-term incentive for that fiscal year, multiplied by 75%. Under the Severance Plan, NEOs other than the CEO are also entitled to an amount equal to 75% of their AIP awards for the fiscal year in which they are terminated, prorated to the date of termination. The CEO is entitled to an amount equal to 100% of her AIP award for the fiscal year in which she was terminated, prorated to her date of termination. In each case, the AIP award calculation uses the actual Company Multiplier for the fiscal year in which the executive is terminated and is paid after the end of the fiscal year at the same time AIP awards are paid to active employees. NEOs who are retirement-eligible under the terms of the AIP are eligible for either the treatment under the Severance Plan (75% for NEOs or 100% for the CEO) or retirement treatment (an Individual Multiplier determined at the discretion of Clorox) for purposes of the AIP award payout. The MDCC decides which treatment to apply; in either case, the AIP award payout would remain prorated to the date of termination. The Severance Plan provides NEOs with a lump-sum cash payment in lieu of continued participation in our medical, vision, and dental insurance programs. The cash payment represents the value of the monthly employer contribution toward those benefits in which the NEO was enrolled at termination, times 24 months. In addition, NEOs will be eligible to participate in any combination of our medical, vision, and dental plans offered to former employees who retire at age 55 or older having completed at least 10 years of service, on the same terms as such other former employees. Where applicable, this coverage continues until the NEO turns age 65. Thereafter, the NEO may participate in our general retiree health plan as it may exist in the future, if otherwise eligible. If the NEO will be age 55 or older and will have completed at least 10 years of service at the end of, and including, the two- year period following termination, the NEO will be deemed to be age 55 and to have 10 years of service under any pre-65 retiree health plan. Under Clorox’s policy applicable to all employees, a NEO who is at least age 55 with 10 years of service or who has 20 years of service regardless of age on the date of termination is eligible to receive retirement-related benefits as described in the Termination Due to Retirement section below. Severance-related benefits are provided only if the NEO executes a general release prepared by Clorox. Termination Due to Retirement. Under Clorox’s policies applicable to all employees, upon retirement, NEOs are eligible for benefits under the AIP, LTI, ERP, 401(k), and other applicable Clorox benefit plans, including our retiree health plan as it may exist in the future, if otherwise eligible based on the provisions of the respective plans. A NEO who, on the date of termination, is at least age 55 with 10 years of service, has 20 years of service regardless of age, or is at least age 65 regardless of service is eligible to receive a pro rata portion of the AIP award for the fiscal year in which retirement occurs. A NEO who is at least age 55 with 10 years of service or who has 20 years of service regardless of age on the date of termination is eligible to receive retirement-related treatment of unvested LTI awards:

  38. Severance Plan

    | • | RSUs and stock options held for at least six months will continue to vest in accordance with the original vesting schedule. Vested stock options will remain exercisable for five years following the NEO’s retirement or until the expiration date, whichever is earlier. |

  39. Severance Plan

    | • | PSUs granted before fiscal year 2024 will be paid out on a pro rata basis at the end of the relevant performance period based on the actual level of performance achieved during that period. |

  40. Severance Plan

    | • | Under a retirement provision applicable to executives only, PSUs granted starting in fiscal year 2024 and held for at least six months will continue to vest in accordance with the original vesting schedule and will be paid out at the end of the relevant performance period based on the actual level of performance achieved during that period. |

  41. Severance Plan

    | The Clorox Company 2024 Proxy Statement > Executive Compensation Tables | 71 | |

  42. Severance Plan

    Termination Due to Disability or Death. If a NEO begins to receive benefits under our long-term disability plan, Clorox may terminate the NEO’s employment at any time, in which case, under Clorox’s policy applicable to all employees, the NEO will receive a pro rata portion of the AIP award and a pro rata portion of the NEO’s 6% annual contribution to the 401(k) plan for the fiscal year of termination. Stock options and RSUs will vest in full, and all vested options will remain exercisable for one year following the NEO’s disability or until the expiration date, whichever is earlier. All PSUs will be paid out at the end of the relevant performance period based on the actual level of performance achieved during that period. Under Clorox’s policy applicable to all employees, if a NEO’s employment is terminated due to death, the NEO’s beneficiary or estate is entitled to (i) a pro rata portion of the NEO’s actual AIP award for the fiscal year of death, (ii) a pro rata portion of the NEO’s 6% annual contribution to the 401(k) plan for the fiscal year of death, and (iii) benefits pursuant to our life insurance plan. Stock options and RSUs will vest in full, and all vested options will remain exercisable for one year following the NEO’s death or until the expiration date, whichever is earlier. All PSUs will be paid out at the end of the relevant performance period based on the actual level of performance achieved during that period. Termination for Misconduct. Clorox may terminate a NEO’s employment for misconduct at any time without notice. Upon the NEO’s termination for misconduct, the NEO is not entitled to any AIP award for the fiscal year in which their termination for misconduct occurs. “Misconduct” under the Severance Plan means any act or omission of the NEO through which the NEO: (i) willfully neglects significant duties he or she is required to perform or willfully violates a material Clorox policy, and, after being warned in writing, continues to neglect such duties or continues to violate the specified Clorox policy; (ii) commits a material act of dishonesty, fraud, misrepresentation or other act of moral turpitude; (iii) acts (or omits to act) with gross negligence in the course of employment; (iv) fails to obey a lawful direction of the Board or, for NEOs other than the CEO, a corporate officer to whom he or she reports, directly or indirectly; or (v) acts in any other manner inconsistent with Clorox’s best interests and values. All unvested and outstanding stock options, RSUs, and PSUs are forfeited upon termination for misconduct. In addition, any retirement-related benefits a NEO would normally receive related to long-term incentive awards are forfeited upon termination for misconduct. Voluntary Termination. A NEO may resign from employment at any time. Upon a NEO’s voluntary resignation, other than when such NEO is eligible for retirement as described above, the NEO is not entitled to any AIP award for the fiscal year of termination. All unvested stock options, RSUs, and PSUs are forfeited upon voluntary termination. Previously vested stock options will remain exercisable for 90 days after resignation or until the expiration date, whichever is earlier. Potential Payments Upon Change in Control

  43. Executive Change in Control Severance Plan

    | • | Our PEO to median compensated employee pay ratio is 177:1. |

  44. Individual Performance Considerations

    | (1) CAP definition of pension benefits is equal to service cost during the fiscal year. During fiscal year 2024, service cost was zero. The prior service cost reported for fiscal year 2024 represents the increase in benefit obligation measured as of September 30, 2023 relating to the plan’s December 18, 2023 amendment (effective October 1, 2023) to provide an extra quarter of interest to certain cash balance accounts at an annualized rate of 2.41%. This increase in the benefit obligation was determined for each of the named executives in each of the current and past three fiscal years. |